Session 506 Hot Topics in Labor Law October 20, :00 a.m. to 10:30 a.m. Panelists: Rob Bernstein, Shareholder, Greenberg Traurig Pat McGlone, Senior VP & General Counsel, Ullico Jody Riger, Senior Corporate Counsel, Sun Chemical Greg Watchman, Managing Associate GC, Freddie Mac TOPICS TO BE COVERED : NLRB v. Noel Canning, 134 S. Ct (2014) New NLRB Rule on Union Elections Access to EmployerSystems (Purple Communications decision) Joint Employer Liability Developments Employee Handbook Issues Class Action Waivers 2 NLRB v. Noel Canning, 134 S. Ct (2014) Held: January 2012 recess appointments of 3 NLRB members invalid under Art. II; the lack of a quorum invalidated the Boards challenged action. Effect: All Board decisions during recess appointees service invalid. Quorum regained August Of 103 affected Board actions, all have been re- visited; most prior actions reaffirmed. 3 New NLRB Rule on Union Elections Streamlined, Ambush or Quickie Elections? Final Rule on Representation Case Procedures, 79 Fed. Reg (Dec. 15, 2014) Effective April 15, 2015 Rare use of NLRA rulemaking power Tortured procedural history, hotly debated, 2 dissenters 4 Representation Case Procedures NLRBs objectives: Modernize the filing of papers and service of employee notices through electronic means. Streamline Board procedures, largely through reduced time frames from petition for election to ballot-counting and final hearing. Reduce unnecessary litigation and opportunities for delay. Increase transparency and uniformity across Regions. Rule applies to certification and decertification elections. 5 Key Election Process Changes If Region notifies employer that a sufficient petition for election has been filed: Employer must post and distribute notice to employees w/in 2 days. Pre-election hearing to be scheduled w/in 8 days. Statement of position due 1 day before hearing. Waiver of issues not raised in pre-hearing statement of position Regional Director may decide that eligibility and inclusion issues need not be resolved before election. No right to post-hearing briefs. 6 Key Election Process Changes If election is directed by the Regional Director: Former 25-day waiting period replaced with earliest date practicable. Expanded employee info provided to union (incl. employees personal phone numbers,addresses). Request for Board review does not stay the election. Employer to notify employees of the election within 2 days byif the employer customarily communicates with employees by. 7 Key Election Process Changes Employers and unions may stipulate to elections, but not to mandatory post-election Board review. Blocking ULP charges regarding election must be accompanied by an offer of proof and identification of witnesses; Regional Director has discretion to suspend or proceed with election. Post-election challenges generally to be heard 21 days after ballot counting. 8 Developments Since the Final Rule Lawsuits filed to challenge Rule: U.S.D.C. W.D. Tex. dismissed complaint. ( Assoc. Bldg. & Contractors of Tex., Inc. v. NLRB, No CV-026) U.S.D.C. D.C. granted summary judgment to Board (Chamber of Commerce of U.S. v. NLRB, Case No (ABJ)) Average time from petition to election before Rule: 38 days Average time to election after Rule: 22.7 days ( as of June 2015 ) 9 Purple Communications, Inc., NLRB (Dec. 11, 2014) We decide today that employee use offor statutorily protected communications on nonworking time must presumptively be permitted by employers who have chosen to give employees access to theirsystems. In reaching this conclusion, the Board overruled as clearly incorrect its 2007 decision in Register Guard that decision, the Board said, erred by focusing too much on employers property rights and too little on the importance ofas a means of workplace communication 10 Purple Communications, Inc., NLRB (Dec. 11, 2014) Employers handbook contained its electronic communications policy: Computers, laptops, internet access, voic , electronic mail ( ), Blackberry, cellular telephones and/or other Company equipment is provided and maintained by the [Company] to facilitate Company business. All such equipment and access should be used for business purposes only. Employees are strictly prohibited from using the computer, internet, voic andsystems, and other Company equipment in connection with any of the following activities: Engaging in activities on behalf of organizations or persons with no professional or business affiliation with the Company. Sending uninvitedof a personal nature. 11 Purple Communications, Inc., NLRB (Dec. 11, 2014) Board expressly formulate[d] a new analytical framework for evaluating employees use of their employerssystems. Turned to SCOTUS decision in Republic Aviation (1945) We will presume that employees who have rightful access to their employerssystem in the course of their work have a right to use thesystem to engage in Section 7-protected communications on nonworking time. An employer may rebut the presumption by demonstrating that special circumstances necessary to maintain production or discipline justify restricting its employees rights. Because limitations on employee communication should be no more restrictive than necessary to protect the employers interests, we anticipate that it will be the rare case where special circumstances justify a total ban on nonworkuse by employees. In more typical cases, where special circumstances do not justify a total ban, employers may nonetheless apply uniform and consistently enforced controls over theirsystems to the extent that such controls are necessary to maintain production and discipline. 12 Purple Communications, Inc., NLRB (Dec. 11, 2014) Board described its decision as carefully limited in three respects: First, it applies only to employees who have already been granted access to the employerssystem in the course of their work and does not require employers to provide such access. Second, an employer may justify a total ban on nonwork use of, including Section 7 use on nonworking time, by demonstrating that special circumstances make the ban necessary to maintain production or discipline. Finally, we do not addressaccess by nonemployees, nor do we address any other type of electronic communications systems. 13 Purple Communications, Inc., NLRB (Dec. 11, 2014) Several Practical Considerations for Employers Review electronic communications policies, as it will now be the rare case where a total ban can be justified Consider what controls, short of a total ban on nonwork use, can be justified by production and discipline necessities Consider whether certain categories of employees really needaccess, as there is no general requirement that all employees be granted access 14 Joint Employer Liability Post McDonalds July 29, 2014 NLRB Office of the General Counsel announced that McDonalds, USA, LLC will be named as a joint employer respondent in several complaints arising from franchisees response to employee protests. 15 Joint Employer Liability Post McDonalds Implications for Employers: Union organizing efforts may be directed to multiple franchisee locations as well as franchisor Franchisees alleged violation(s) of NLRA may be asserted against the franchisor Potential expansion into other areas of employment law Wage and hour Benefits FMLA Others 16 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks Published on March 18, Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks Start with analyzing whether a workplace policy is unlawful under Sections 7 (concerted protected activity) and 8(a)(1) (an employer cannot interfere with, restrict, or coerce employees in the exercise of their Section 7 rights) and Lutheran Heritage Village- Livonia, 343 NLRB 646 (2004). NLRB has long held that mere maintenance of a workplace policy may violate Section 8(a)(1) if the policy has a chilling effect on Section 7 activity. The NLRB stated in Lutheran Heritage, that the most obvious way a rule violates Section 8 is if it explicitly restricts protected concerted activity. 18 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks BUT, even if the rule does not explicitly prohibit Section 7 rights, the rule will violate the NLRA if (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) it was promulgated in response to Section 7 activity; or (3) it was actually applied to restrict the exercise of Section 7 rights. The GCs Memorandum applies this three-part test to workplace policies. 19 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks Discusses a number of employer policies/rules, including: Confidentiality Media Communications Employee Conduct (with Company, co-workers & managers) Use of Company logos, copyright, & trademarks Interactions / Communications with third parties / media Restrictions on photography and recordings Conflicts of Interest Restrictions on employee from leaving work 20 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks Context and wording are crucial Side-by-side comparisons of whats lawful and whats not Disclaimers helpful but not conclusive NLRB will take aggressive approach against overbroad work policies/rules that could be interpreted to restrict employees in the exercise of Section 7 rights Enforced against unionized and non-union employers 21 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks CONFIDENTIALITY Employees have Section 7 right to discuss terms and conditions of employment (wages, hours, etc.) with co-workers and non-employees A confidentiality policy that prohibits these discussions OR where employees would reasonably understand prohibition is unlawful. BUT, broad prohibitions on disclosing confidential information lawful if no reference to information regarding employees or anything that would reasonably be considered a term or condition of employment b/c employers have legitimate interest in maintaining privacy of business information. 22 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks CONFIDENTIALITY Employer Policy: Lawful or Unlawful? Never publish or disclose the employers or anothers confidential or other proprietary information. Never publish or report on conversations that are meant to be private or internal to the employer. 23 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks CONFIDENTIALITY Employer Policy: Lawful or Unlawful? Answer = Unlawful While an employer may ban disclosure of its own confidential information, a broad reference to anothers information, without further clarification, would reasonably be interpreted to include other employees wages and other terms and conditions of employment. Never publish or disclose the employers or anothers confidential or other proprietary information. Never publish or report on conversations that are meant to be private or internal to the employer. 24 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks CONFIDENTIALITY Examples of rules deemed to be facially unlawful b/c contained broad restrictions and did not clarify, either expressly or contextually, that they did not restrict Section 7 rights: Prohibiting employees from disclosing details about the employer Prohibiting sharing overheard conversations with co-workers, the public, or anyone outside of your work group Discussing work matters only with other employees who have a specific business reason to know or have access to such information Prohibiting sharing any/all non-public information 25 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks CONFIDENTIALITY Examples of rules deemed to be facially lawful b/c (1) no reference to information concerning terms and conditions of employment; (2) confidential is not defined over broadly; and (3) they dont otherwise contain language that would reasonably be constructed to prohibit Section 7 rights: Unauthorized disclosure of business secrets or other confidential information is not permitted Misuse or unauthorized disclosure of confidential information not otherwise available to persons or firms outside the employer is cause for disciplinary action, including termination of employment Do not disclose confidential financial data or other non-public proprietary company information, and do not share confidential information regarding business partners, vendors, or customers. 26 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks CONFIDENTIALITY Even when a confidentiality policy contains overly broad language, the rule will be found lawful if, when viewed in context, employees wouldnt reasonably understand the rule to prohibit protected activity under Section 7. Example: Prohibition on disclosure of all information required in the course of ones work Although when read in isolation would reasonably be interpreted to include employee wages and benefits as confidential information, lawful b/c was included with rules relating to conflicts of interest and compliance with SEC regulations, and state & federal laws. Thus, employees would reasonably understand the information described to encompass customer credits, contracts, and trade secrets, and not Section 7 activity. 27 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks CONFIDENTIALITY In Macys Inc., 01-CA (May 12, 2015), several policies at issue, including a policy restricting employees use of information about other employees and customers. Macys policy prohibited disclosure of any information, which if known outside the Company, could harm the Company or its business partners, customers or employees or allow someone to benefit from having this information before it is publicly known. ALJ ruled the restriction interfered with employees Section 7 rights as employees would believe they couldnt discuss wages, hours, or working conditions among themselves or speak to a union about these items. 28 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks CONFIDENTIALITY Although Macys had a savings clause specifically stating that nothing in the handbook is intended to limit employees from engaging in their Section 7 rights, including protected concerted activity, the ALJ found the clause was insufficient and written in a generic manner whereas the prohibitions on employee conduct were very specific. 29 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks SOCIAL MEDIA Discusses Social Media Policies in connection with employee conduct toward his/her employer and specifically Wendys International LLCs social media policies Employees also have the Section 7 right to criticize or protest their employer's labor policies or treatment of employees. This includes the right to criticize an employer's labor policies and treatment of employees in a public forum. 30 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks SOCIAL MEDIA Following rule, one example of being unlawfully overbroad b/c it would be read to require employees to refrain from criticizing the employer in public : "[I]t is important that employees practice caution and discretion when posting content [on social media] that could affect [the Employer's] business operation or reputation. With regard to these examples, we recognize that the Act does not protect employee conduct aimed at disparaging an employer's product, as opposed to conduct critical of an employer's labor policies or working conditions. These rules, however, contained insufficient context or examples to indicate that they were aimed only at unprotected conduct. 31 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks SOCIAL MEDIA Social Media Policy Wendys International LLC: Refrain from commenting on the company's business, financial performance, strategies, clients, policies, employees or competitors in any social media, without the advance approval of your supervisor, Human Resources and Communications Departments. Anything you say or post may be construed as representing the Company's opinion or point of view (when it does not), or it may reflect negatively on the Company. If you wish to make a complaint or report a complaint or troubling behavior, please follow the complaint procedure in the applicable Company policy (e.g., Speak Out). 32 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks SOCIAL MEDIA Unlawful Although employers have a legitimate interest in ensuring that employee communications are not construed as misrepresenting the employer's official position, we concluded that this rule did not merely prevent employees from speaking on behalf of, or in the name of, Wendy's. Instead, it generally prohibited an employee from commenting about the Company's business, policies, or employees without authorization, particularly when it might reflect negatively on the Company. Accordingly, we found that this part of the rule was overly broad. We also concluded that the rule's instruction that employees should follow the Company's internal complaint mechanism to "make a complaint or report a complaint" chilled employees' Section 7 right to communicate employment- related complaints to persons and entities other than Wendy's. 33 Employee Handbook Issues NLRB General Counsel Memo on Employee Handbooks SOCIAL MEDIA In Boch Imports, Inc., 362 NLRB No. 83 (April 30, 2015), the employers policy (1) required employees to identify themselves when posting comments about the employer, the employers business, or the employers policies; and (2) prohibited employees from using the employers logo in any manner. Unlawful: Self-identification overly broad because employees would reasonably construe it to include comments about the terms and conditions of employment and reasonably interfere with protected concerted activity on social media Blanket prohibition on use of companys logo could be reasonably read by employees to cover protected communications (i.e., engaging in union activity while wearing clothing with the company logo). 34 Employee Handbook Issues Confidentiality in Investigations The NLRB has reissued its Banner Health Systems decision (June 26, 2015), declaring that employer investigation rules requiring confidentiality in all investigations violate employees Section 7 rights to discuss ongoing disciplinary investigations Under Banner Health, employers may only consider requiring confidentiality on a case-by-case basis. Worse, the majoritys announced standard for requiring confidentiality would be hard to applyand even harder to meet. 35 Employee Handbook Issues Confidentiality in Investigations The majority stated that an employer may require confidentiality if it concludes that witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, or there is a need to prevent a cover-up. The Board left unaddressed whether employee privacy concerns could warrant confidentiality, or whether concerns about possible retaliation against witnesses would do so. Moreover, employers are precluded from imposing confidentiality requirements unless they have objectively reasonable grounds to believe that the integrity of the investigation will be compromised without confidentiality. Few employers will have such certainty, and fewer still will have it at the outset of an investigation. 36 Employee Handbook Issues Confidentiality in Investigations In dissent, Member Miscimarra noted that the Board should have provided guidance as to the proper balancing of employer and employee interests in corporate investigations, and that delegating this responsibility to employers to assess on a case-by-case basis will create significant uncertainty. Miscimarra criticized the majoritys assessment of the competing interests. In the great majority of cases, Miscimarra asserted, requiring confidentiality in investigations will have little or no impact on employees Section 7 rights. In contrast, there are important employer and employee interests in confidentiality. Miscimarra chastised the majority for attach[ing] a weight of zero to these interests. Miscimarra noted that the majoritys opinion would undermine investigations, and impede employers from addressing workplace discrimination, harassment, and other workplace misconduct. 37 Employee Handbook Issues At-Will Provisions In American Red Cross (2012), the NLRB found that an employers at-will policy violated the NLRA because it implicitly suggested that the at-will policy could not be changed through collective bargaining. In subsequent memoranda from the Boards Associate General Counsel, it appears that the Boards focus is on what at-will policies say about changes to the policy. At-will policies that do not allow for the possibility of a change are likely problematic; conversely, policies that allow for changes to the at-will arrangementbut only when there is a written agreement signed by the chief executiveare permissible. 38 Employee Handbook Issues Conflict of Interest Rules In Remington Lodging, 362 NLRB No. 123 (6/18/15), the Board struck down an employers generic conflict of interest provision as unlawful on its face because it could give employees the impression that organizing activity was prohibited. The rule provided: I understand that conflict of interest with the hotel or company is not permitted. Member Miscimarra (R) disagreed that the rule was unlawful on its face; in his view it could not reasonably be read to suggest that concerted activity was prohibited. He agreed, though, that the employer had violated the NLRA by disciplining employees for violating the rule after they engaged in concerted activity. 39 Class Action Waivers In AT&T Mobility v Concepcion (2011), the Supreme Court held that the FAA protects employers rights to utilize class action waivers as part of arbitration programs. In D.R. Horton (2012), however, the NLRB ruled that employers violate the NLRA when they include a class action waiver provision in a corporate arbitration program designed to resolve employment disputes. Reasoned the NLRB: The right to engage in collective actionincluding collective legal actionis the core substantive right protected by the NLRA. 40 Class Action Waivers In 2013, the 5 th Circuit (737 F.3d 344) declined to enforce the Boards D.R. Horton ruling, finding that i)The right to use class action procedures is a procedural rather than substantive NLRA right; and ii)The FAA protects employers rights to utilize class action waivers even if such use displaces employees procedural rights. In addition, the Boards D.R. Horton ruling has received near universal condemnation from other federal and state courts. Sutherland v. Ernst & Young (2nd Cir. 2013) Owens v. Bristol Care (8 th Cir. 2013) Overwhelming majority of federal district courts 41 Class Action Waivers Despite the federal courts hostility to the Boards D.R. Horton holding, the Board continues to issue decisions reconfirming this holding. As one dissenting member noted, the NLRB majority has chosen to double down on a mistake that, by now, is blatantly obvious. Murphy Oil (10/28/14) Chesapeake Energy (4/30/15) The NLRB chose not to appeal the Fifth Circuits decision in D.R. Horton to the Supreme Court. The Fifth Circuit will likely refuse to enforce the NLRBs Murphy Oil decision, setting up another opportunity for the NLRB to appeal to the Supreme Court. 42